We have purified and characterized a Drosophila protein called Rrp1 (Recombination Repair Protein 1), which is a homologue of Escherichia coli exonuclease III based on the similarity of their amino acid sequences. Rrp1 is enzymatically similar to its bacterial homologue, both when purified from Drosophila embryos and when expressed in E. coli from its cDNA. The protein copurifies with apurinic endonuclease and dsDNA 3'-exonuclease. The apurinic endonuclease activity has been demonstrated using partially depurinated plasmid DNA as a substrate. The Rrp1 AP endonuclease specific activity is 1.2 x 10(5) U/mg, a value that is less than two-fold different than the exonuclease III specific activity. The exonuclease activity of Rrp1 requires a base-paired terminal nucleotide and is 3'-5' specific. Surprisingly, the ratio of these two activities is dramatically different for Rrp1 protein and its bacterial homologue. In addition to having DNA repair functions, Rrp1 carries out in vitro the DNA strand transfer step that is important in homologous recombination and catalyzes the renaturation of ssDNA. A single peptide with an apparent size of 105 kDa copurifies with each of the enzymatic activities of Rrp1. This polypeptide is sufficient for all these activities, since a highly purified protein fraction synthesized in E. coli demonstrates electrophoretic, chromatographic and enzymatic properties similar to those of native Drosophila Rrp1 protein. The Rrp1 protein family includes E. coli exonuclease III, S. pneumoniae exonuclease A, bovine BAP, mouse APEX endonuclease, and human APE. Within a 250 amino acid region colinear homology is shared between all members. Rrp1 is unique in that it includes an N-terminal region of more than 400 amino acids for which no related sequence has been found. This region is thought to interact with ssDNA and is likely to influence the enzymatic properties of Rrp1. Rrp1 may facilitate recombinational repair at sites of DNA damage, or may have distinct and independent functions in homologous recombination and DNA repair.